SBI, PNB In Race For Harshads 11% ACC Stake

Mumbai, Sept 18: | Updated: Sep 19 2003, 05:30am hrs

The late Big Bull Harshad Mehtas 11 per cent holding in cement major ACC, which will be out for open bidding from the Custodians shelf shortly, is bringing in new bidders amid speculation about their gameplan.

Along with old bidders like Life Insurance Corporation of India (LIC) and a few private players, including Mehtas shell companies, some new entrants which are joining the fray to pick up the shares are the two large domestic state-owned commercial banks State Bank of India (SBI) and Punjab National Bank (PNB). Sources confirmed that SBI and PNB were interested in bidding for this holding.

Market sources point out that though these two banks cannot invest more than five per cent of their total investment in equities under the prudential guidelines, the attraction of a blue-chip company and the available lucrative bid price are believed to be the two key motivating factors for these banks to join the bidding bandwagon.

Thus far, the market for Mehtas shares, which include Reliance, Tata Tea, Hero Honda, ITC, Hindustan Lever, Apollo Tyres, Castrol and Gujarat Ambuja, has been a low-key affair with the involvement of a few players. But sources tracking the developments say this may not be the case for ACC as the chunk of shares on offer is substantially larger and this can be a strategic investment for any bidder.

Even LIC, which has thus far acquired more than Rs 350 crore worth of such tainted shares, is not expecting an easy run in its bid for the ACC shares.

We feel the competition for the ACC shares in terms of player and pricing will be intense this time as such a large chunk is four steps less than 15 per cent needed to make an open offer for the company, said a senior LIC official.

On earlier occasions, it has not always been the pricing which has determined the buyer. Key considerations have been whether a buyer can acquire the whole lot of shares on offer, the official said, adding that LIC at times has acquired many tainted shares this way.

The ACC holding is being seen as critical with market reports of possible interest from multinational cement companies in these shares. Gujarat Ambuja already has a 14.6 per cent holding in ACC and has on previous occasions stated that it would not like to breach the 15 per cent mark which would trigger an open offer under the Substantial Acquisition of Shares and Takeover (SAST) Regulations of the Securities and Exchange board of India.

Market sources expect that the sale of 11 per cent by the custodian will make clear many past speculations on ACC.